A Good Stock Broker Assists Clients In Purchasing And Selling Equities
A stock broker is a person who assists in buying and selling of financial securities. The stock broker acts as the intermediary in such transactions. Ordinarily, you would need to know about the price trends of the stock that you are contemplating to buy, since you do not want to lose money in the long run. Stock brokers are experts, who keep abreast of this information. They deal with buying and selling of stocks and shares, under the instructions of their clients.
Stock Brokers in the UK should be a member of the London Stock Exchange and regulated by the Financial Services Authority (FSA). Broadly speaking there are three types of services provided by the Brokers. These are discretionary services, advisory services, and execution only services.
In case of discretionary services, the broker has the general discretion of managing your portfolio in the manner he thinks best. Of course you always have the option to narrow down the lines of discretion providing a well defined guideline. Examples of such guidelines could be your instructions to pick shares providing high income value, or investment in a particular type of company. The Stock Broker gets a commission of about 1.65% of the transaction value. You may also opt for a quarterly or annual management charges based on the value of your portfolio. But, when you pay such management charges, the commissions are usually lower.
The second type of stock brokers is the advisory brokers. These types of brokers will come up with advice now and again on your transactions and business. They may often suggest changes in the present pattern of the portfolio that you are holding. However, they do not have any discretion to carry on the transactions on their own. Charges in this type of brokerage service shall vary with their expertise. There are brokers who charge more for advisory services than the discretionary services. The third types of brokers do only the execution part. The primary duty of such brokers is to execute the instructions of the client, related to buying and selling of his stock. However, you will get different types of administrative help like the tax returns, factual reports etc. It is difficult to make money as an execution broker, since the earnings are based on commission only, and the market is extremely competitive. The brokerages are based on the basis of value of the transaction. The charges go down as the value rises. However, there would be a minimum brokerage applied. A lot of traders that use execution only services tend to do the majority of their trading online. There may be certain circumstances where you may not require a stock broker at all. The principle will be applicable in cases where a well known company or organisation comes up with a new issue, and you subscribed for shares directly on the basis of their advertisements or brochures. For example, you can invest in shares floated by a well known bank. The application is made by simply filling up a form. Some of the historically famous Stock Brokers were Larry "Buster" Crabbe, Brian Dennehy, Edward Francis Huon, Michael Milken, George Murphy, and William A.Paine .
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